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EIH proposes to raise Rs 400-cr for buys

C.R. Sukumar

HYDERABAD, Aug. 15

EIH Ltd, a Rs 519-crore hospitality major and part of the Oberoi Group, is planning to raise funds to the tune of Rs 400 crore to part finance its acquisitions and expansion programmes both in India and abroad.

The company, which is engaged in the hotel, flight catering and other allied businesses, currently owns and operates deluxe hotels both in India and abroad.

It requires substantial funds as the deluxe hotels need constant renovation and upgradation within short periods owing to fast-changing customers needs across the globe. These renovations and reconstructions include replacement of imported plants and equ ipment.

Apart from this, the company has also keenly observing the current business scenario which has been offering a number of opportunities to acquire prime hotel sites in the metropolitan cities and tourist centres.

The EIH management has also zeroed in on some opportunities available for it to acquire heritage and other properties to set up deluxe hotels. These opportunities, both in India and abroad, are currently being examined by the management.

To part finance the expansion of its business, renovations, reconstructions of existing units and also fresh investment plans, the EIH board recently approved a resolution to raise funds of up to Rs 400 crore by offering securities.

Though the company is yet to finalise the nature of instrument for the purpose, it is likely to issue further preference shares as it proposes to enhance the authorised capital accommodating fresh preference share capital.

EIH proposes to enhance its authorised capital to Rs 300 crore from the existing level of Rs 200 crore. The fresh authorised capital of Rs 100 crore is divided into one crore cumulative redeemable preference shares of Rs 100 each.

Of the existing authorised capital of Rs 200 crore, which is divided into 10 crore equity shares of Rs 10 each and one crore cumulative redeemable preference shares of Rs 100 each, the company has already issued 5.23 crore equity shares of Rs 10 each agg regating Rs 52.39 crore and the entire cumulative redeemable preference shares. The enhanced authorised capital would now enable the company to raise funds through the issue of preference shares.

Further, keeping in view the increasing activities, the company proposes to enhance its borrowing limit to Rs 700 crore from the current level of Rs 500 crore. The board is of the view that the borrowings would be required to supplement the finance needs for its future expansion programmes.

EIH proposes to obtain the approval of its shareholders for these proposals at its ensuing annual general meeting.

For the year ended March 31, 2001, the company has registered a growth of 11.28 per cent in revenue and 30.83 per cent in post-tax profit. It posted a net profit of Rs 94.81 crore (Rs 72.47 crore) on a revenue of Rs 518.93 crore (Rs 466.31 crore) with re serves and surplus amounting to Rs 996.41 crore (Rs 950.18 crore).